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Disparity Study

The Cannabis Disparity and Availability Study (“Disparity Study”) will collect and analyze data and report on whether discrimination exists in the Illinois cannabis industry. If there is a finding that discrimination exists, the Disparity Study will evaluate the impact of the discrimination on the State and its residents regarding entering and participating in the State’s cannabis industry. The Disparity Study will include recommendations for reducing or eliminating any identified barriers to entry.  

The U.S. Supreme Court has found that governments must conduct Disparity Studies to uncover facts and concrete evidence of a compelling interest before instituting any policies that use race or gender as a program condition. Without a compelling interest based on a strong factual basis, courts have found that race- or gender-based policies violate the U.S. Constitution. Illinois’ current cannabis licensing program does not consider race and gender for licensing.  The Cannabis Regulation Oversight Office (CROO) Disparity Study will measure accessibility, whether any discrimination exists, whether it impacts entry and participation, and suggest potential remedies for Illinois cannabis regulation.

On February 14, 2022, the State published a formal request for proposals (RFP) to find a vendor to conduct a Disparity Study of the cannabis licensing system. The process resulted in a contract with the Nerevu Group, a 100% minority- and women-owned group of contractors and subcontractors from Peoria, Decatur, Springfield, Chicago, and additional locations across the country. 

The final report is due to the General Assembly and Governor in 12 months. Additional information on the status of the Disparity Study, including how to contribute comments and feedback, will continue to be posted on the CROO webpage as soon as available. 

The Cannabis Regulation and Tax Act (CRTA) mandates the Cannabis Disparity Study by the CROO:

410 ILCS 705/5-45(e)
The Illinois Cannabis Regulation Oversight Officer shall commission and publish one or more disparity and availability studies that: (1) evaluates whether there exists discrimination in the State's cannabis industry; and (2) if so, evaluates the impact of such discrimination on the State and includes recommendations to the Department of Financial and Professional Regulation and the Department of Agriculture for reducing or eliminating any identified barriers to entry in the cannabis market. Such disparity and availability studies shall examine each license type issued pursuant to Sections 15-25, 15-30.1, or 15-35.20, subsection (a) of Section 30-5, or subsection (a) of Section 35-5, and shall be initiated within 180 days from the issuance of the first of each license authorized by those Sections. The results of each disparity and availability study shall be reported to the General Assembly and the Governor no later than 12 months after the commission of each study.
The Illinois Cannabis Regulation Oversight Officer shall forward a copy of its findings and recommendations to the Department of Financial and Professional Regulation, the Department of Agriculture, the Department of Commerce and Economic Opportunity, the General Assembly, and the Governor.

What is the purpose of the Disparity and Availability Study?

A Disparity and Availability Study (“Disparity Study”) is a study that collects and analyzes data for a report about whether discrimination exists in the State’s cannabis industry. If there is a finding that discrimination exists, it will evaluate the impact of the discrimination on the State and its residents regarding entering and participating in the State’s cannabis industry. The Disparity Study will then include recommendations for reducing or eliminating any identified barriers to entry.

The U.S. Supreme Court ruled in Richmond v. J.A. Croson in 1989 that governments must establish a “compelling interest” to support the creation of contracting programs that specifically target minority- and/or women-owned businesses. Without a “compelling interest” and a strong factual basis, courts have found that race- or gender-based policies violate the nondiscrimination mandates of the U.S. Constitution.

 The Cannabis Regulation and Tax Act requires the CROO to conduct a disparity study for each of the types of cannabis licenses issued by the State. The CROO Disparity Study will assess whether discrimination exists in the Illinois cannabis industry and the availability, utilization, and accessibility of minority- and women-owned businesses in Illinois’ cannabis industry.

Who is responsible for the Disparity Study?

Under the Cannabis Regulation and Tax Act (“CRTA”), the Cannabis Regulation Oversight Officer (CROO) is responsible for commissioning and publishing a Disparity Study for adult use licenses. CROO has commissioned the Nerevu Group for the cannabis Disparity Study after a public Request for Proposal process.

The Cannabis Regulation Oversight Office:

The Illinois Cannabis Regulation Oversight Officer (CROO) leads a team within the Department of Financial and Professional Regulation (“IDFPR”) to serve a coordinating role among State agencies involved in cannabis regulation, including IDFPR which regulates dispensaries, the Illinois Department of Agriculture, which regulates cultivators, craft growers, transporters, and infusers, and other State agencies. The CROO is appointed by the Governor and approved by the Illinois Senate. In addition to conducting a Disparity Study about cannabis licensing in Illinois, the CROO is also responsible for developing and promoting best practices for ensuring diversity in the cannabis industry in Illinois and eliminating any identified barriers to access to this new industry. 

The Nerevu Group:

Nerevu Group (pronounced {nay-RAY-voo}) is a data analytics firm that helps organizations uncover the insights hidden in their real-time data. With a focus on development, data intelligence, and data strategy, Nerevu ushers its clients into the data-driven future. By automating manual processes, simplifying business analytics, and integrating data silos, Nerevu empowers its clients to improve their operations and drive growth.

Nerevu Group is a 100% minority-owned firm that has assembled an experienced and knowledgeable team of minority and women-owned contractors and subcontractors from Peoria, Decatur, Springfield, Chicago, and additional locations across the country. Their combined expertise in equity analysis, disparity studies, and cannabis law gives Team Nerevu the range of skills needed for Illinois’ cannabis Disparity Study.

 

What data is examined in a cannabis Disparity Study?

Generally, Disparity Studies examine the availability and willingness of businesses to enter into a government program. If there is a gap between the availability and willingness of minority-owned businesses and the participation in that program, the Disparity Study may recommend policy solutions.

For this cannabis Disparity Study, CROO has commissioned the Disparity Study to study adult use dispensary, cultivation center, craft grow, infuser, and transporter licenses. The Nerevu Group will examine both qualitative/anecdotal and quantitative data on the cannabis industry:

Qualitative and anecdotal data:

- Laws, regulations, and court cases about cannabis and disparity studies

- Unique organizational characteristics of cannabis businesses and markets, including the past criminalization of cannabis

- Surveys, focus groups, and interviews to gather public and stakeholder input

Quantitative data:

- Data on availability or qualified, willing, and able business entrants

- Cannabis application processes, responses, and results

- Cannabis business data

- The CROO Diversity Survey

- State technical assistance and supports

These data and inputs will be further defined and clarified throughout the Disparity Study process. 

 

How can local businesses, stakeholders, and members of the public get involved and contribute their input?

More information on how to submit input and information to the Nerevu Group will be provided on the CROO website.

- The Nerevu Group will be gathering information from applicants and potential licensees over the next few months. Future information about townhalls, focus groups, and other events to share your experience will be posted on this website.

- If you are a cannabis business, you will receive the CROO Diversity Survey beginning early 2023. Your main point of contact with the State will receive the link and instructions. This mandatory Diversity Survey ensures the most accurate data is available for the Disparity Study. The 2020 and 2021 CROO Diversity Surveys will also be available to Nerevu.

- If you are a cannabis employee, you will receive the CROO Employee Diversity Survey beginning early in 2023. This voluntary and anonymous survey will improve the State’s understanding of diversity in the industry and inform the Disparity Study on the perspective of employees in the industry. Please help the Disparity Study by participating in the survey!

- Share your experiences about Illinois cannabis business licensing by using the “Contact Us” section of the webpage. You also can submit any written testimony directly to FPR.CROO@Illinois.gov.

After completion of the Disparity Study, the Nerevu Group will provide a public presentation detailing the research’s scope, methodology, findings, recommendations, and rationales. Future details will be sent to licensees, stakeholder groups, and posted on the CROO website.

 

Which cannabis license types are being examined in the Disparity Study?

CROO has commissioned the Disparity Study to study adult use dispensary, cultivation center, craft grow, infuser, and transporter licenses.

Per statute each license type issued pursuant to Sections 15-25, 15-30.10, or 15-35.20, subsection (a) of Section 30-5, or subsection (a) of Section 35-5, and shall be initiated within 180 days from the issuance of the first of each license authorized by those Sections.

 

What is done with the results of the Disparity Study?

The results of the Disparity Study will be reported to the General Assembly, the Governor, and published on the CROO website. Any recommendations included in the Disparity Study will be sent to the Department of Financial and Professional Regulation, the Department of Agriculture, the Department of Commerce and Economic Opportunity, the General Assembly, and the Governor.

The results of the Disparity Study will inform policymakers on whether discrimination exists in cannabis in Illinois, whether it impacts the industry, and what remedies could address the disparities. This factfinding is a critical tool for better understanding equity in cannabis and how State policies address access and participation in the Illinois cannabis industry.

 

When/where will the Disparity Study results be available to the public?

The Disparity Study must be completed within 12 months of commissioning. It will then be reported to the General Assembly and Governor and publicly accessible on the CROO website.

 

Have other states conducted similar studies?

Maryland has conducted a more limited cannabis Disparity and Availability Study. Some local governments in other states, including San Francisco and Denver, have conducted similar studies for their jurisdictions.

 

How is the information for the Disparity Study analyzed?

The Nerevu Group will examine the qualitative/anecdotal and quantitative data and produce utilization and availability ratios (e.g., the minority utilization ratio would be minority-owned businesses in the Illinois cannabis industry divided by the total number of cannabis businesses).

Anecdotal and qualitative input from stakeholders and businesses will support the data analysis and provide the broader context.

The methodology will draw from court cases and legal precedent on Disparity and Availability Studies.

 

How can I ask more questions?

Please contact CROO at FPR.CROO@Illinois.gov